Ford plans to reduce their Dealer Count by 10%

[XDCX]

Automotive News had a report indicating that Ford plans to reduced their dealer count by 10% in an effort to increase sales per dealer and enhance dealer profitability.

Ford currently has about 3,300 dealers and that includes 261 stand-alone Lincoln Mercury stores. Many people in the industry question whether a stand-alone Lincoln store would be viable once Mercury goes away later this year. The consolidation of Lincoln stores into the existing network of Ford dealership could account for the bulk of Ford's 10% goal.

There's no indication how Ford plans to encourage the consolidations but there have been reports in the past suggesting that Ford is offering to buy-out some dealerships.

[steve_biegler]

Originally Posted by XDCX

Automotive News had a report indicating that Ford plans to reduced their dealer count by 10% in an effort to increase sales per dealer and enhance dealer profitability.

Ford currently has about 3,300 dealers and that includes 261 stand-alone Lincoln Mercury stores. Many people in the industry question whether a stand-alone Lincoln store would be viable once Mercury goes away later this year. The consolidation of Lincoln stores into the existing network of Ford dealership could account for the bulk of Ford's 10% goal.

There's no indication how Ford plans to encourage the consolidations but there have been reports in the past suggesting that Ford is offering to buy-out some dealerships.

What a novel idea.....pay a dealer for his lifes work. I'm glad one manufacturer is doing it right. But then again I wonder if they would have taken advantage of a BK if they would have gone through it. I like to think they are just doing the right thing. I can dream, can't I?

[steve_biegler]

You know I get tired of the "lets reduce the number of dealers so we can have more sales per dealer and they can make more money." Anybody think about building a better product, seems to me that may get you to the same end result.

[Granch]

Originally Posted by steve_biegler

You know I get tired of the "lets reduce the number of dealers so we can have more sales per dealer and they can make more money." Anybody think about building a better product, seems to me that may get you to the same end result.

Good point. Their logic doesnt make alot of sense, very one dimensional.
Reducing the dealer network doesn't translate into higher profits per dealer, it usually translates into lost market share..

[XDCX]

Originally Posted by steve_biegler

What a novel idea.....pay a dealer for his lifes work. I'm glad one manufacturer is doing it right. But then again I wonder if they would have taken advantage of a BK if they would have gone through it. I like to think they are just doing the right thing. I can dream, can't I?

While Ford was clearly the healthiest of the Detroit 3 and didn't need to be "rinsed" with a bankruptcy filing, I think the selfish interests of the Ford family also played a role. As I recall, the Ford family has a preferred class of stock that gives them much more control of the company than the percentage of equity they control. (I think they control 40% of the vote but less than 5% of the equity.)

If Ford had filed for Chapter 11 all the shareholders would have been wiped out and the Ford family would have lost an element of control over the company.

[XDCX]

Originally Posted by Granch

Good point. Their logic doesnt make alot of sense, very one dimensional.
Reducing the dealer network doesn't translate into higher profits per dealer, it usually translates into lost market share..

I agree.

In Ford's case I get the impression they're just setting the stage for the fact their dealer count is going to drop and they want to signal that it was part of their original plan. I just don't see how a stand-alone Lincoln store would be viable based on the current product offerings.

[steve_biegler]

Originally Posted by XDCX

While Ford was clearly the healthiest of the Detroit 3 and didn't need to be "rinsed" with a bankruptcy filing, I think the selfish interests of the Ford family also played a role. As I recall, the Ford family has a preferred class of stock that gives them much more control of the company than the percentage of equity they control. (I think they control 40% of the vote but less than 5% of the equity.)

If Ford had filed for Chapter 11 all the shareholders would have been wiped out and the Ford family would have lost an element of control over the company.

I didn't know that......thanks for the info.
I guess I was dreaming!

[Granch]

Here's an article about cutting their Lincoln dealers down

http://www.msnbc.msn.com/id/39524013/ns/business-autos/

[XDCX]

Originally Posted by Granch

Here's an article about cutting their Lincoln dealers down

http://www.msnbc.msn.com/id/39524013/ns/business-autos/

Thanks for the link.

I just read the story in Automotive News - Ford's planning to cut 40% of the Lincoln Dealers in metro markets and force the dealers in the rural markets to upgrade their facilities. Ford's VP for U.S. Sales and Service indicated that fewer than 25% of the existing dealers meet their standards for facility and sales/service satisfaction.

To me, it sounds a lot like Chrysler's original Project Genesis.

[XDCX]

Based on a report in Automotive News it appears the stand-alone Lincoln dealers will have until January to decide their fate. The message from Ford is to invest in your facilities or sell out to your neighboring dealers.

Ford sold 67 Lincolns per dealer last year contrasted to Lexus which sold 947 per dealer.

Based on Chrysler's results I question the wisdom of killing dealers in an effort to increase sales. While it may make sense in metro markets it seems like it's a lose-lose proposition in the rural markets.